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Report: Indiana tax policy has benefited wealthy as median income dropped

September 4, 2018

A new report analyzing the well-being of Indiana’s families has found that median household income has dropped in Indiana more than $4,500 since 2000 to just more than $52,000, and that incomes are not keeping up with expenses for Hoosiers.

The report released Friday by the Indiana Institute for Working Families also found that the average Indiana worker, who makes $35,422 annually in wages, makes nearly $2,100 less than the average Midwesterner. In addition, nearly seven in 10 jobs in the state will be considered low-wage occupations for a family of three by 2026--a sharp increase from 63 percent in 2017.

“The data in this report should be a wake-up call to all Hoosiers that Indiana is now a fundamentally different state for working families in 2018 than it was at the beginning of the 21st century,” Andrew Bradley, senior policy analyst for the institute and the report's author, said in a media release.

“These aren’t accidents or bad luck, but the results of policy choices that have kept job quality standards low, weakened the safety net, reduced worker voice, widened income inequality, and put an increasing state tax burden on middle-class and working families," Bradley said.

The report, which calls to increase the state’s minimum wage from $7.25 per hour to $12 per hour by 2026, along with other policy suggestions to improve worker conditions and strengthen unions, was compiled using data from the left-leaning Economic Policy Institute.

Among the reports findings: Indiana ranks second-lowest in the Midwest in terms of median hourly wages ($17.03); basic costs for working families such as housing and childcare, have increased five times as fast as incomes since 2009; and the state ranks last in the Midwest in terms of residents with post-secondary degrees or credentials (37.7 percent).

The report found evidence of widening income inequality. For example, it found that the top 1 percent of earners in Indiana ($804,275 average) earn more than 17 times the average income of the bottom 99 percent of workers ($46,501). In addition, the bottom half of earners saw negative wage growth from 2000 to 2017, while the wealthiest 20 percent of Hoosiers have seen 87 percent of the wage growth in that period.

The top 1 percent of earners also have received an extra $2,500 from income, corporate and gas tax changes since 2012, compared to the bottom 60 percent of families, whose taxes increased an average of $36 during that time.

The assertions in the report were questioned by chief Indiana budget writer Tim Brown, a Republican from Crawfordsville, who is chairman of the Indiana House Ways and Means committee.

Brown said the state’s tax policy changes “benefit everybody” and have “allowed an environment where you have the ability to get a job in this state anywhere if you want it.”

He also said incomes are based on “education and initiative.”

“If you want to skill for it, you can make any amount of money you want,” Brown said.

Brown also said overall state income tax receipts are up nearly 8 percent versus last year, which he asserted is a better measure of how Hoosiers are doing compared to median household incomes.

“The assumption is wages are being driven down but we’ve seen the wage base increase over the last year,” Brown said. 

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